How to make a balance sheet – Multi-Prêts Mortgages

In this article

  • Why make a budget
  • The different steps to take stock
  • Analyze and update your budget

Why make a budget

While the idea of ​​budgeting may seem daunting to some people, this exercise is still essential to better understanding where your money is going and possibly adopting better financial habits.

This exercise is also of great help in balancing income and expenses, but also in regaining control of one’s finances. It can also allow you to pay off your debts and save for projects that are important to you or to create an emergency fund to deal with the unexpected.

How to make a budget

Find the tool that’s right for you

There are many budgeting tools to make your job easier. All you have to do is enter your income and expenses in the appropriate boxes, then the calculation will be done automatically.

The Budget Planner offered by the Government of Canada, for example, allows you to create a custom budget and save it online. As the exercise progresses, tips and tricks are offered to help you stay on track, and the graphs also illustrate where your money is going.

Other apps are available on your phone or computer to keep an eye on your cash flow; some even automatically sync with your bank account during transactions to allow you to monitor your cash inflow and outflow.

List your income

In addition to your salary, you are likely to have other sources of income. These may be tips, bonuses or commissions, social assistance or employment insurance benefits, investment income, annuity, alimony, CNESST allowance, child benefits, Quebec solidarity tax on credit, or GST and QST refunds. Most of these amounts can usually be found in the “Deposit” column of your bank statement.

However, remember to enter your net income, i.e. net of tax deductions, as well as all the sums as you received them. When in doubt, your payslip and latest tax return can provide you with valuable information.

List your expenses

Like income, all expenses must be reported in the appropriate boxes. If some items are not in the budget tool, you can easily add them to the table.

Among the different categories are fixed expenses such as rent or mortgage, electricity, telecommunications services (internet, subscriptions to cable or various video on demand platforms, mobile and residential telephony), sports subscriptions, public transport tickets, related to pets, insurance (life, critical illness, disability) and debt repayment.

Variable expenses include groceries, outings and restaurants, clothing and beauty and grooming products, medical expenses, gifts and vacations.

As for one-off expenses such as registration taxes, renewal of driving licences, vehicle maintenance costs and any repairs, or fees to a professional association, these should not be overlooked. Invoices from the previous year might give you a good idea of ​​the expected amounts for the current year.

Do not hesitate to keep your invoices to determine your various expenses and, above all, do not forget the purchases paid in cash which can significantly affect your budget. For example, the $3 treat paid to brighten up your coffee break will end up costing you more than $700 by the end of the year.

Finally, keep in mind that the more precise the amounts, the more your budget will reflect your financial situation. Bank and credit card statements can be of great help to you.

How to make a budget - Blog post |  Multiprets mortgage

The importance of paying yourself first

In addition to the sums set aside to pay off debts, a part of your budget should be devoted to savings, both for your retirement and simply to carry out the projects that are close to your heart. The amount will largely depend on the tenor of your goals and your financial situation. You will certainly see more clearly once you set your budget.

Setting up an emergency fund is also a must. This should allow you to cover three to six months of expenses to cover contingencies such as job loss, illness leading to the inability to work or a serious financial problem.

If setting aside these sums may seem like a mountain, nothing prevents you from starting with small sums. You probably won’t even notice.

Analyze your budget

Once you have integrated your income, your expenses and the sums destined for savings and the emergency fund, you will then find out if you are in a deficit or, on the contrary, on the right track.

In any case, it is important to review all consumption items in order, in particular, to address unnecessary expenses that could be reduced or eliminated altogether.

This exercise will also help you better balance your budget, such as by scheduling larger payments or reevaluating your ability to pay down debt.

Update your budget regularly

During the first few months, get into the habit of reviewing your budget to see if it’s realistic. You’ll also have a better idea of ​​what’s coming out of your pockets, and it’ll be easier to correct course if needed. To do this, do not hesitate to write down your expenses and keep your invoices.

Finally, don’t forget to update your budget as your situation changes. The arrival of a child, the purchase of a property, the loss of a job or simply a drop in expenses are all events that will affect your financial situation.

To remember

  • Budgeting is a great way to manage your finances
  • There are several tools to help you
  • It is essential to draw up an accurate list of your income and expenses
  • Budgeting can help you save
  • Updating your budget will keep you on track

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